French Business Sentiment Jumps to Highest in Almost Five Years

  • Improving confidence is latest sign of stenghtening recovery
  • Insee index also at highest since 2011, PMI composite lags

French business confidence unexpectedly jumped in January in the latest sign that the nation’s recovery is gaining strength.

Sentiment among factory executives climbed to 101 from a revised reading of 100 in December, the Bank of France said Monday. That’s the highest since May 2011 and beats the median economist prediction of 99 in a Bloomberg survey.

With confidence improving, investment is also gathering pace, suggesting the French economy is shifting away from the dependence on consumer spending that had characterized it until now. The Bank of France says its surveys predict growth of 0.4 percent in the first quarter of 2016.

“Orders, deliveries, production -- all the indicators are strongly up,” said Maxime Sbaihi, an economist at Bloomberg Intelligence in London. “It’s a good signal at the beginning of the year. It reinforces the positive impression given lately by other surveys.”

The business confidence index compiled by national statistics office Insee is also holding at its highest since 2011, while Markit’s composite Purchasing Managers Index has indicated growth -- albeit modest -- for 12 months.

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